An embedded system is a computer system designed to perform one or a few dedicated functions often with real-time computing constraints. It is embedded as part of a complete device often including hardware and mechanical parts. By contrast, a general-purpose computer, such as a personal computer (PC), is designed to be flexible and to meet a wide range of end-user needs. Embedded systems control many devices in common use today. See here for further description.
As the general purpose systems (PCs) are becoming smaller and smaller and the embedded systems become more and more powerful (and universally usable devices), the border between embedded systems and general purpose systems will become more and more unsharp in future. Also a point of discussion would be to which section smart phones are to be assigned.
The original EMBEDDED topic has been moved to TARGET Embedded (Embedded Systems w/o OS)